Gold steadies as miners try to cut costs| MENAFN.COM

Saturday, 28 January 2023 10:25 GMT

Gold steadies as miners try to cut costs

(MENAFN- ProactiveInvestors)Gold steadied but was still below US$1100 as analysts piled in with renewed forecasts on the metal. After Goldman Sachs announced yesterday that it expected to see gold fall to US$1000 Morgan Stanley said a worst-case scenario may see gold dive to US$800. Gold gained less than US$3 to US$1097. The dramatic fall has seen shares in gold miners plummet this week and it seems things could get worse. A report suggests that at these price levels approximately 10% of gold mines will soon be in loss-making territory. What's worse report author Wood Mackenzie said a lot of it is the miners' own fault. In a quest for growth particularly at the end of the bull market gold miners developed more marginal projects and paid premiums for them. Additionally a lot of the current pipeline projects were evaluated at a gold price of US$1200. As a result miners have been slashing costs to make projects viable. US-based Newmont Mining today reduced its cost outlook for this year due to  lower oil prices and favourable exchange rates. It said costs applicable to gold sales were cut from US$660-US$710/oz to US$630-US$680/oz. Meanwhile Australia-based miner Newcrest said gold output was up 6% year-on-year despite the falling price with gold production around 674000oz in the three months to June. Its margin increased 13% in the year through June 30 even as its average realised price fell from US$1292/oz to US$1236/oz. Investec noted it indicated minders can survive at current levels helped by the devaluation of local currencies where companies have non US$-based operations. In non-dollar terms gold has largely increased over the past year. In Australian dollars it has risen 8% from A$1380/oz to A$1490/oz. Gold traded US$3 higher to US$1097 while silver was flat at US$14.73 and platinum rose US$3 to US$982.

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